Dealing with Wage Garnishments and Bank Freezes from the California Franchise Tax Board
The California Franchise Tax Board (FTB) has a reputation for taking severe actions such as garnishing wages or freezing bank accounts, even years after a tax issue arises. This often happens when taxpayers have moved to another state or when their employers are notified about garnishment orders. Here are some common issues:
- Listing a primary residence in California without filing taxes there
- Failing to file taxes at all
- Reporting income incorrectly by missing stock or option sales from 1099 and 1098 forms
Real-Life Examples of Taxpayer Issues
I once had a client living abroad who faced wage garnishment for not reporting income from stock sales. Another client had his bank account frozen due to unfiled taxes from his time in Los Angeles. Despite these problems, resolving the issues was relatively straightforward.
Steps to Resolve FTB Issues
For the client with the frozen bank account, we filed the missing three years of returns (two on paper) and sent them via express mail. After paying a $540 fee, his accounts were unfrozen, and he had a few weeks to pay the $3,000–$4,000 owed. The entire process took about two and a half weeks.
To address FTB issues, immediately file California Form 540 and report all worldwide income. Then, contact the FTB to discuss how to unfreeze your account or lift the garnishment.
Example of an FTB Withholding Letter
The FTB issues a withholding order to enforce payment for unpaid California Personal Income Tax. The order requires the recipient to withhold funds from the taxpayer’s assets or payments. Specific instructions include notifying the taxpayer, retaining withheld funds for 10 business days, and sending a completed questionnaire along with the remittance.
Contact Us for Assistance
If you need help with FTB issues or any other tax-related concerns, reach out to us today. We’re here to assist with all your tax needs!
